11 June 2024

Starmer confident interest rates will fall under Labour

11 June 2024

Interest rates would come down under a Labour government, Sir Keir Starmer has said, after economists criticised Rishi Sunak for making a similar claim.

Asked whether he was confident interest rates would fall if Labour came to power, Sir Keir told reporters he was, as his party would “stabilise the economy”.

He added: “That’s why we’ve set out our six steps which are the things that we will do on July 5, on the first day if we get the opportunity, and the first thing is to stabilise the economy, for the very reason I said.

“If you lose control of the economy it’s working people who pay the price and I’m not prepared to let that happen.”

At the beginning of the General Election campaign, the Prime Minister made a similar claim in an interview with The Times, saying a vote for the Conservatives was a vote for interest rate cuts.

But economists criticised his statement, saying interest rates were a matter for the independent Bank of England, prompting Mr Sunak to deny he was putting undue pressure on the Bank’s Monetary Policy Committee.

He said he had only agreed with Bank Governor Andrew Bailey, who had himself said he was “optimistic” about interest rates coming down as inflation falls.

In May, Mr Bailey said a rate cut in June could not be “ruled out” but was not a “fait accompli”, while Huw Pill, the Bank’s chief economist, said a summer rate cut was “not unreasonable”.

The Bank’s base rate is currently 5.25%, its highest level since 2008, but is expected to fall later in the year now inflation has returned to the 2% target.

A reduction in the Bank’s rate should feed through into lower interest rates for mortgage-holders.

The best videos delivered daily

Watch the stories that matter, right from your inbox